'Put Up or Shut Up' Time for Mister Softee

Next week is a big week for Microsoft (MSFT), which is scheduled to report its latest earnings Thursday. Although I have no position in the name, I've noted here since last November (and on Yahoo! Finance in October) that I've thought the stock works as a short.

In particular, I've been skeptical about the company's new Windows 8 operating system since before it launched. I thought there was no way that was going to suddenly reinvigorate the personal-computer industry -- and that appears to be true. But I had also thought this revelation would suddenly send Microsoft shares into a tailspin, and that clearly hasn't happened -- at least not yet.

From a $28 level last fall, the stock did indeed decline to about $26 on initial news that Windows 8 wasn't shaping up to be a big success. Yet it has traded above that level since mid-January, with a spike above $30 last week. (Intel (INTC) has been another one like Microsoft: I keep waiting for it to swoon, and it remains stuck at $22.)

However, last week we got some new numbers that weren't helpful to Microsoft: The PC industry contracted 14% in the last quarter. That, plus some cautious notes from Microsoft analysts, dropped the shares by 5% in the last couple of sessions.

Next week will be "put up or shut up" time for Mister Softee, when they'll tell the world their latest earnings.

From CEO Steve Ballmer's comments, you would think that things have never been better at Microsoft. Just this week, he was pounding the table about how 400 million devices would be running Windows 8 by this time next year. He exhorted developers to start flocking to building apps for Windows 8.

On Thursday, we will see what a full quarter of Windows 8 sales looks like. We will know why Steve Sinofsky, former president of the Windows segment, left Microsoft right after the product launch. Was it because he had tired out, or because of some dissatisfaction with Ballmer's or others' perspectives about the final result of Windows 8?

Yes, Microsoft offers more services in addition to PCs, but this is still a company that's heavily dependent on a growing and vibrant PC industry -- and I think the risk lies in the possibility that this industry is about to be savaged. It's going to hurt anyone without a clear mobile strategy and to this point, I don't think Microsoft really has one.

To be honest, I like BlackBerry's (BBRY) longer-term mobile strategy more than that of Microsoft. If it becomes clear that Windows 8 is just not cutting it over the next two quarters, it wouldn't surprise me to hear a resurgence of those seven-year-old rumors that Microsoft will buy out the company.